FRS 105 Micro Entity Accounts in Eastleigh

FRS 105 is the UK financial reporting standard that applies to the micro-entities regime. It sets out how a qualifying micro-entity recognises and measures the items in its accounts and what it needs to disclose, with a deliberately simplified approach compared with the frameworks used by larger companies. In practice, FRS 105 keeps reporting to historical cost, avoids fair value accounting, and requires fewer notes, which means the resulting FRS 105 financial statements are often shorter and more straightforward than small company accounts prepared under FRS 102.

FRS 105 is available to companies that qualify as micro-entities and choose to apply the micro-entities regime. Qualification depends on meeting the size conditions for the relevant accounting period, as well as not falling within any of the exclusions that apply regardless of size — for example, public companies and companies with securities admitted to trading on a regulated market, along with certain other ineligible entities and groups. Because both the size test and the exclusions matter, it is worth reviewing your specific position rather than assuming that a small company automatically qualifies.

No. The micro-entities regime is an available accounting framework, not a mandatory one. A company that qualifies as a micro-entity can choose to apply it and prepare accounts under FRS 105, or it can prepare accounts under another framework such as FRS 102 Section 1A for small entities. FRS 105 applies when the micro-entities regime is chosen. The choice is worth thinking about carefully, because some companies find the extra accounting options and disclosures available under FRS 102 better suit how they want to present their position.

For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of these 3 conditions to qualify as a micro-entity: turnover of no more than £1 million, a balance sheet total of no more than £500,000, and an average of no more than 10 employees during the period. Meeting the size conditions is not the end of the story — other eligibility rules and exclusions can apply, and in some cases a company must consider its position as part of a group. This is why eligibility should be assessed on the facts of your company rather than on the thresholds alone.

Both are UK financial reporting standards, but they sit at different levels of complexity. FRS 105 is the micro-entities standard: it works on a historical cost basis, does not permit fair value accounting or revaluations, and requires a limited set of disclosures. FRS 102 Section 1A is the small entities standard, which offers more accounting options — such as revaluation of certain assets, fair value measurement in some areas, and accounting for deferred tax — alongside more extensive disclosure requirements. In simple terms, FRS 105 is the leaner option, and it is not always the best fit if you want to use those additional accounting treatments.

Yes. Where a company prepares accounts under the micro-entities regime and is required to file accounts, those accounts are submitted to Companies House. Micro-entity accounts are filed in a simplified form, and a copy of the profit and loss account does not normally need to be included in the version placed on the public record. Filing accounts with Companies House is a separate exercise from dealing with HMRC: your Corporation Tax Return (CT600) is submitted to HMRC on its own timetable and contains different information, even though both are built on the same underlying financial records.

Yes, they are two distinct obligations. FRS 105 Micro Entity Accounts are the financial statements prepared under the micro-entities regime, which set out your company's balance sheet position and supporting notes. A CT600 is the Corporation Tax Return submitted to HMRC, which reports your company's taxable profits and calculates the tax due under tax rules rather than accounting rules. The accounts are usually the starting point for the tax computation, but adjustments are often needed, so the two documents will not always show identical figures. A Confirmation Statement is a third, separate filing.

We typically need your bookkeeping or accounting records for the period, including bank and credit card statements, sales and purchase records, payroll information, details of any assets bought or sold, loan agreements and balances, and any director's loan transactions. Your previous year's accounts are important for comparatives, along with details of share capital and any changes to the company's structure during the year. If you hold stock or work in progress, a valuation at the period end is useful too. The better the records, the more straightforward the preparation of the accounts — and the fewer questions we need to come back to you with.

A newly incorporated company can use FRS 105 if it qualifies as a micro-entity for its accounting period and chooses to apply the micro-entities regime. Many start-up companies with modest turnover, a small balance sheet and few or no employees will meet the size conditions in their first period, but the wider eligibility rules and exclusions still need to be checked, particularly if the company is connected with other businesses. If FRS 105 is not appropriate, there are other frameworks available, so it is worth confirming the position early rather than after the accounts have been prepared.